National Institute of Economic and Social Research - Credit constraintshttps://www.niesr.ac.uk/tags/credit-constraints
enConsumption Dynamics, Housing Collateral and Stabilisation Policies: A Way Forward for Policy Co-Ordination?https://www.niesr.ac.uk/publications/consumption-dynamics-housing-collateral-and-stabilisation-policies-way-forward-policy
<div class="field field-name-field-summary field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"><p>We decompose aggregate consumption of heterogeneous consumers by modelling both savers and their links to collateral constrained borrowers through a bank which prices credit risk. Savers own both firms and the commercial bank while borrowers require loans from the commercial bank to effect their consumption plans. The bank lends at a premium over the interest rate on central bank money in proportion to the riskiness of loans, the demand for loans, the asset price and the quantity of housing collateral. We show that even though house price do not represent wealth, aggregate consumption is closely related to movements in house prices. We consider the case for jointly determined macro-prudential, fiscal and monetary policies in order to minimise losses for a representative household. We consider the implications of loan default for our main results.</p>
</div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above"><div class="field-label">Keyword tags:&nbsp;</div><div class="field-items"><div class="field-item even">Heterogeneous households</div><div class="field-item odd">Credit constraints</div><div class="field-item even">Housing collateral</div><div class="field-item odd">Asset prices</div><div class="field-item even">Bank lending</div><div class="field-item odd">Macro-prudential tools</div><div class="field-item even">fiscal and monetary policy</div></div></div>Wed, 31 Jan 2018 10:46:01 +0000Stevens, S13216 at https://www.niesr.ac.ukhttps://www.niesr.ac.uk/publications/consumption-dynamics-housing-collateral-and-stabilisation-policies-way-forward-policy#comments